A consignment stock model under demand dependent on inventory level In order to attract customers and simulate the customers

purchase, the retailers make every effort on in-store display and product demonstration. Because of inventory management affects by customers demand, the study considers the relationship between retailers and suppliers stock and customers demand. Moreover, classical inventory models usually assume that the demand is constant and independent of inventory level. However, this kind of assumption can not express the real situation.

Previously, few inventory models concerning consignment stock model and inventory-level-dependent demand pattern have been found in the literature. The research will build a model at the product demonstration and the lot sizing decisions for both retailers and manufacturers with stock-dependent demands. We also combine the concept of consignment stock into this model. Also we assume the demand rate and inventory level is linear. The analytical models embraced the display effect are developed to determine the optimal ordering cycle time, the ordered quantity, the length of the production run that maximize the models profits. Finally, numerical examples and sensitivity analysis are presented to illustrate the proposed model.

Key words: consignment stock, demand dependent on inventory level, supply chain